Public Storage 1999 Annual Report Download - page 47

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45
Same Store storage facilities:
(historical property operations)
(Dollar amounts in thousands Year Ended December 31, Percentage Year Ended December 31, Percentage
except rent per square foot) 1999 1998 Change 1998 1997 Change
Rental income $543,522 $520,767 4.4% $520,767 $483,930 7.6%
Cost of operations (includes an imputed
6% property management fee)
(1)
187,582 182,761 2.6% 182,761 171,579 6.5%
Net operating income $355,940 $338,006 5.3% $338,006 $312,351 8.2%
Gross profit margin
(2)
65.5% 64.9% 0.6% 64.9% 64.5% 0.4%
Weighted Average:
Occupancy 92.5% 92.5% 0.0% 92.5% 91.7% 0.8%
Realized annual rent per sq. ft
(3)
$ 10.27 $ 9.84 4.4% $ 9.84 $ 9.22 6.7%
Scheduled annual rent per sq. ft
(3)
$ 10.50 $ 10.25 2.4% $ 10.25 $ 9.84 4.2%
1.Assumes payment of property management fees on all facilities, including those facilities owned by the Company for which no fee is paid. Cost of operations
consists of the following:
1999 1998 1997
Payroll expense $ 46,755 $ 46,280 $ 45,337
Property taxes 47,986 48,557 45,626
Imputed 6% property management fees 32,611 31,246 29,035
Advertising 7,751 5,352 4,192
Telephone reservation center costs 8,159 7,313 4,606
Other 44,320 44,013 42,783
$187,582 $182,761 $171,579
2. Gross profit margin is computed by dividing property net operating income (before depreciation expense) by rental revenues. Cost of operations includes a 6%
management fee.The gross profit margin excluding the facility management fee was 71.5%, 70.9% and 70.5% in 1999, 1998 and 1997, respectively.
3. Realized rent per square foot as presented throughout this report 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.
In early 1996, we implemented a national telephone reservation system designed to provide added customer service for all the storage
facilities under management.We believe 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.
In 1999, the rate of revenue growth over 1998 for the Same Store facilities was less than the rate of growth experienced in 1998 over 1997.
This was primarily due to a leveling of occupancy levels in 1999 combined with a slower level of growth of realized rent per occupied square
foot.We expect to continue to experience similar growth rates in fiscal 2000 as we experienced in 1999.
Rental income for the Same Store facilities included promotional discounts totaling $15,243,000 in 1999 compared to $15,494,000 in 1998
and $17,223,000 in 1997. During 1997 there was experimentation with pricing and promotional discounts designed to increase rental activity;
such promotional activities continued in 1998.
The 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.
U B LI C T O RAG E,N C . 1999 N N UAL RE P O RT