Public Storage 1998 Annual Report Download - page 45

Public Storage, Inc. 1998 Annual Report
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As indicated above, in early 1996, the Company implemented a national telephone reservation system designed to provide added customer service
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.
Rental income for the Same Store facilities included promotional discounts totaling $15,615,000 in 1998 compared to $17,390,000 in 1997 and
$6,227,000 in 1996. The significant increase in 1997 was principally due to experimentation with pricing and promotional discounts designed to
increase rental activity; such promotional activities continued in 1998.
The self-storage facilities experience minor seasonal fluctuations in occupancy levels with occupancies generally higher in the summer months
than in the winter months. The Company believes that these fluctuations result in part from increased moving activities during the summer.
Same-Store Operating Trends by Region
Northern California Southern California Texas Florida Illinois Other states Total
% change % change % change % change % change % change % change
from prior from prior from prior from prior from prior from prior from prior
Amount year Amount year Amount year Amount year Amount year Amount year Amount year
Rental Revenues:
1998 $80,083 10.4% $95,051 10.1% $48,543 5.8% $33,077 6.0% $37,698 9.6% $228,942 5.9% $523,394 7.6%
1997 $72,555 9.4% $86,368 8.1% $45,868 4.0% $31,219 5.5% $34,405 10.5% $216,095 5.2% $486,510 6.6%
1996 $66,343 8.5% $79,883 5.0% $44,101 1.2% $29,595 2.6% $31,123 9.0% $205,369 5.0% $456,414 5.2%
Cost of operations
1998 $22,546 9.2% $27,902 7.4% $21,088 10.3% $13,123 5.2% $17,236 7.0% $ 81,734 4.6% $183,629 6.5%
1997 $20,650 9.8% $25,988 5.4% $19,114 4.5% $12,474 7.9% $16,106 8.2% $ 78,123 4.9% $172,455 6.0%
1996 $18,809 3.5% $24,665 6.0% $18,299 5.6% $11,561 3.6% $14,887 5.5% $ 74,500 6.7% $162,721 5.7%
Net operating income:
1998 $57,537 10.9% $67,149 11.2% $27,455 2.6% $19,954 6.4% $20,462 11.8% $147,208 6.7% $339,765 8.2%
1997 $51,905 9.2% $60,380 9.3% $26,754 3.7% $18,745 3.9% $18,299 12.7% $137,972 5.4% $314,055 6.9%
1996 $47,534 10.6% $55,218 4.6% $25,802 (1.6%) $18,034 2.1% $16,236 12.5% $130,869 4.1% $293,693 5.0%
Weighted avg. occupancy
1998 94.6% (1.5)% 94.2% 2.7% 92.4% 0.5% 90.9% 0.7% 92.6% 1.1% 91.6% 0.7% 92.5% 0.8%
1997 96.1% 1.6% 91.5% 4.1% 91.9% 2.4% 90.2% 2.4% 91.5% (1.3)% 90.9% (1.3)% 91.7% 0.6%
1996 94.5% 3.3% 87.4% 2.3% 89.5% 1.0% 87.8% 0.6% 92.8% 0.0% 92.2% 0.5% 91.1% 1.1%
Weighted avg. annual realized rents per occupied sq. ft.
1998 $12.37 11.9% $11.37 7.3% $7.22 5.4% $8.77 5.2% $10.69 8.1% $9.41 5.3% $9.84 6.8%
1997 $11.05 7.6% $10.60 3.2% $6.85 1.0% $8.34 2.8% $9.89 11.9% $8.94 6.7% $9.21 5.7%
1996 $10.27 4.6% $10.27 2.2% $6.78 0.3% $8.11 2.3% $8.84 8.5% $8.38 4.6% $8.71 3.9%
Number of
Facilities 127 143 116 74 60 464 984
Liquidity and Capital Resources
The Company believes that its internally generated net cash provided by operating activities will continue to be sufficient to enable it to meet its
operating expenses, capital improvements, debt service requirements and distributions to shareholders for the foreseeable future.
Operating as a real estate investment trust (“REIT”), the Company’s ability to retain cash flow for reinvestment is restricted. In order for the
Company to maintain its REIT status, a substantial portion of its operating cash flow must be used to make distributions to its shareholders (see “REIT
status” below). However, despite the significant distribution requirements, the Company has been able to retain a significant amount of its operating