Public Storage 1996 Annual Report Download - page 37

P UBLIC S TORAGE , I NC . 1996 A NNUAL R EPORT
35
S UPPLEMENTAL P ROPERTY D ATA AND T RENDS
There are approximately 81 ownership entities owning in aggregate 1,064 self-storage facilities, including the facilities which the Company owns
and/or operates. At December 31, 1996, 343 of these facilities were owned by Unconsolidated Entities, entities in which the Company has an owner-
ship interest and uses the equity method for financial statement presentation. The remaining 721 facilities are owned by the Company and
Consolidated Partnerships, many of which were acquired through business combinations with affiliates during 1996, 1995, and 1994.
In order to evaluate how the Company’s overall portfolio has performed, management analyzes the operating performance of a consistent
group of self-storage facilities representing 951 (55.8 million net rentable square feet) of the 1,064 self-storage facilities (herein referred to as
“Same Store” self-storage facilities) which have been operated under the “Public Storage” name for at least the past three years. The Same Store
group of properties includes 613 consolidated facilities and 338 facilities owned by Unconsolidated Entities. The following table summarizes the
pre-depreciation historical operating results of the Same Store self-storage facilities:
S
AME -S TORE M INI -W AREHOUSE F ACILITIES :
(Historical property operations) Year Ended December 31, Year Ended December 31,
(Dollar amounts in thousands, except rent per square foot) 1996 1995 Change 1995 1994 Change
Rental income $445,586 $422,933 5.4% $422,933 $403,295 4.9%
Cost of operations
(1)
158,212 149,660 5.7% 149,660 144,752 3.4%
Net operating income $287,374 $273,273 5.2% $273,273 $258,543 5.7%
Gross profit margins
(3)
64.5% 64.6% (0.2)% 64.6% 64.1% 0.8%
Weighted avg. occupancy 91.2% 90.1% 1.2% 90.1% 89.2% 1.0%
Weighted avg. realized rent per sq. ft.
(2)
$8.76 $8.40 4.3% $8.40 $8.16 2.9%
Weighted avg. scheduled annual rent per sq. ft.
(2)
$9.00 $8.16 10.3% $8.16 $7.80 4.6%
1. Assumes payment of property management fees on all facilities, including those facilities owned by the Company which effective November 16, 1995 no fee is paid. Cost of operations
consists of the following:
1996 1995 1994
Payroll expense $ 43,490 $ 42,545 $ 41,092
Property taxes 40,799 38,325 36,941
Property management fees 26,139 25,391 24,214
Advertising 3,851 3,502 3,709
Telephone center costs 1,956 – –
Other
(4)
41,977 39,897 38,796
$158,212 $149,660 $144,752
2. Realized rent per square foot represents the actual revenue earned per occupied square foot. Management believes this is a more relevant measure than the scheduled rental rates,
since scheduled rates can be discounted through the use of promotions.
3. Gross profit margin is computed by dividing property net operating income (before depreciation expense) by rental revenues. Cost of operations include a 6% management fee. The
gross profit margin excluding the facility management fee was 70.5%, 70.6% and 70.1% in 1996, 1995 and 1994, respectively. On November 16, 1995, the Company acquired its facility
manager and no longer incurs such fees on the properties it owns.
4. Other expenses principally include utilities, repairs and maintenance, and other items such as office expenses.
As indicated above, in early 1996, the Company implemented a national telephone reservation system designed to provide added customer ser-
vice for all the self-storage facilities under management by the Company. The Company believes that the improved operating results, as indicated
in the above table, in large part are due to the success of the national telephone reservation system. However, the national telephone reservation
system was not fully operational for most of the self-storage facilities until the latter part of the fourth quarter of 1996. As of December 31, 1996,
the national telephone reservation system was supporting rental activity at all of the self-storage properties managed by the Company, with the
exception of one major market, which will be operational by end of March 1997.
Rental income for the Same Store facilities included promotional discounts totaling $6,000,000 in 1996 ($3,000,000 of which occurred during
the fourth quarter of 1996) compared to $729,000 and $1,466,000 in 1995 and 1994, respectively. The significant increase in 1996 was principally
due to experimentation with pricing and promotional discounts designed to increase rental activity.
In addition to evaluating property operating trends in occupancy, realized rents, expenses and net operating income on a Same Store basis, man-
agement evaluates trends by geographic regions. Operating trends for the Same-Store facilities for the five largest regions are shown in the table
on the following page.