Public Storage 2000 Annual Report Download

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2000 Annual Report
There’s more to Public Storage...

Table of contents

  • Page 1
    The re 'sm o retoP ub licSto rage ... 2000 Annual Report

  • Page 2
    ...Than s to rage .

  • Page 3
    ... acquired in a merger, including property management agreements and excess purchase cost over net assets acquired), and (ii) less FFO attributable to minority interest. FFO is a supplemental performance measure for equity REITs as defined by the National Association of Real Estate Investment Trusts...

  • Page 4
    ...managed self-storage to how to economically transport their belongings across town, the state or the country. Finding solutions to storage problems benefits both the customer and our company. Our many superior property locations, clean, well-managed storage space, complementary businesses addressing...

  • Page 5
    ... those households renting storage space. Our national call centers in California and Texas are designed to acquire, assimilate and utilize information about the services and products our customers want us to provide to solve their storage problems. Thanks to Public Storage employees, who generously...

  • Page 6
    ... NV 22 CA 296 UT 6 OH 31 VA 37 NC 24 SC 24 AZ 14 AL 21 HI 5 TX 164 LA 11 GA 62 FL 137 Properties (December 31, 2000) Location Number of Properties(1) Net Rentable Square Feet Alabama Arizona California Colorado Connecticut Delaware Florida Georgia Hawaii Illinois Indiana Kansas Kentucky...

  • Page 7
    ...From January 1, 2001 through March 14, 2001, the Company repurchased 3,961,800 shares at an aggregate cost of approximately $102,200,000. Total Revenues In Millions $750 600 450 300 Net Income In Millions $300 250 Annual Realized Rent Per Occupied Square Foot Same Store Facilities (1) $10.36 $10...

  • Page 8
    ...31, 2000 December 31, 1999 Assets Cash and cash equivalents Real estate facilities, at cost: Land...payable Distributions payable Accrued and other liabilities Total liabilities Minority interest: Preferred partnership interests Other Commitments and contingencies Shareholders' Equity: Preferred Stock...

  • Page 9
    ... 31, 2000 2000 1999 1998 Revenues: Rental income: Self-storage facilities Commercial properties Containerized storage facilities Equity in earnings of real estate entities Interest and other income Expenses: Cost of operations: Self-storage facilities Commercial properties Containerized storage...

  • Page 10
    ...,600 shares) Costs in connection with issuance of preferred operating partnership units (see Note 8) Net income Distributions to shareholders: Preferred Stock Equity Stock, Series A Common Stock regular distribution, $0.88 per share Common Stock special distribution Balances at December 31, 2000 See...

  • Page 11
    P U B L I C S TO R A G E , I N C . 2000 A N N UA L R E P O R T Class B Common Stock Paid-in Capital Cumulative Net Income Cumulative Distributions Total Shareholders' Equity $700 700 700 700 $1,903,782 293,708 52,949 (71,974) - - - 2,178,465 (3,...

  • Page 12
    ... Net cash provided by operating activities Cash flows from investing activities: Principal payments received on mortgage notes receivable Acquisition of minority interests Notes receivable from affiliates Acquisition of real estate facilities Acquisition cost of business combinations Reduction...

  • Page 13
    ... of minority interest in exchange for common stock Distributions payable Cumulative distributions paid Issuance of Common Stock: In connection with business combinations To acquire minority interests Acquire partnership interests in real estate entities In connection with conversion of Convertible...

  • Page 14
    ... for lease, usually on a month-to-month basis, for personal and business use. In addition, to a much lesser extent, we have interests in commercial properties. In 1996 and 1997, we organized Public Storage Pickup and Delivery, Inc., as a separate corporation and partnership (the corporation and...

  • Page 15
    ... believe are valued in excess of the related note receivable. Accounts receivable are not a significant portion of total assets and are comprised of a large number of individual customers. Real estate facilities Real estate facilities are recorded at cost. Depreciation is computed using the straight...

  • Page 16
    ...,963 shares were reserved for issuance upon conversion of limited partnership units in Storage Trust's operating partnership. The aggregate acquisition cost of the merger was approximately $575,676,000, consisting of the issuance of the Company's common stock of approximately $347,223,000, cash of...

  • Page 17
    ... assumed with respect to the transactions occurring in 2000, 1999, and 1998 are summarized as follows: (Amounts in thousands) Partnership Acquisitions Storage Trust Merger REIT Mergers Total 2000 business combinations: Real estate facilities Other assets Accrued and other liabilities $ 82...

  • Page 18
    ...: (Amounts in thousands) 2000 1999 1998 Operating facilities, at cost: Beginning balance Property acquisitions: Business combinations (Note 3) Other acquisitions Disposition of facilities Facilities contributed to unconsolidated real estate entities Newly developed facilities opened for operations...

  • Page 19
    ... up to $220 million of storage facilities. We own 30% of the joint venture interest and the institutional investor owns the remaining 70% interest. We periodically transferred newly developed properties, the cost of which were included in real estate, to the partnership as part of our capital...

  • Page 20
    ... to those real estate entities in which the Company had an ownership interest at December 31, 2000 are as follows: (Amounts in thousands) For the year ended December 31, 2000: Other Equity Investments Development Joint Venture PSB Total Rental income Other income Total revenues Cost of operations...

  • Page 21
    ...storage facilities with a total cost of approximately $231.5 million. The partnership is funded solely with equity capital consisting of 30% from the Company and 70% from the institutional investor. Note 6 - Revolving Line of Credit The credit agreement (the "Credit Facility") has a borrowing limit...

  • Page 22
    ...on the Credit Facility) during 2000, 1999 and 1998 was $13,071,000, $12,528,000, and $7,690,000, respectively. In addition, in 2000, 1999 and 1998, the Company capitalized interest totaling $9,778,000, $4,509,000, and $3,481,000, respectively, related to construction of real estate facilities. Note...

  • Page 23
    ... minority interest by $16,159,000, with the excess of cost over underlying book value ($15,112,000) allocated to real estate. During 1999, in addition to the OP Unit redemptions noted above, we acquired limited partnership interests in certain of the Consolidated Entities in several transactions for...

  • Page 24
    ... disposition of real estate, adjusted as follows: (i) plus depreciation and amortization (including the Company's pro-rata share of depreciation and amortization of unconsolidated equity interests and amortization of assets acquired in a merger, including property management agreements and goodwill...

  • Page 25
    ... separate public offering) each representing 1/1,000 of a share of Equity Stock, Series A ("Equity Stock A"). • In the first half of 2000, we issued 52,547 depositary shares of Equity Stock A with an aggregate value of $1,025,000 to a related party in connection with the acquisition of real estate...

  • Page 26
    ... to certain directors, officers and key employees to purchase shares of the Company's common stock at a price equal to the fair market value of the common stock at the date of grant. Generally, options under the Plans vest over a three-year period from the date of grant at the rate of one-third per...

  • Page 27
    ... employees and service providers on terms determined by an authorized committee of the Board of Directors; no shares of restricted stock have been granted. In connection with the Storage Trust merger in March 1999, we assumed the outstanding non-qualified options under the Storage Trust Realty 1994...

  • Page 28
    .... We believe that the historical cost of the Company's real property does not have any significant bearing upon the performance of the commercial property and storage segments. In the same manner, management believes that the book value of investment in real estate entities as having no bearing upon...

  • Page 29
    ... storage Commercial properties Commercial property rentals Equity in earnings - commercial property operations Equity in earnings - Depreciation (commercial properties) Commercial properties segment revenues Other items not allocated to segments Equity in earnings - general and administrative...

  • Page 30
    ... properties) Total commercial property segment income Other items not allocated to segments Equity in earnings - general and administrative and other Interest and other income Corporate general and administrative Interest expense Minority interest in income Gain on disposition of real estate...

  • Page 31
    ...to Issue No. 97-11, "Accounting for Internal Costs Relating to Real Estate Property Acquisitions." The 97-11 Guidance provides that a company shall expense internal preacquisition costs (such as costs of an internal acquisitions department) related to the purchase of an operating property. We do not...

  • Page 32
    ... A N N UA L R E P O R T Note 15 - Supplementary Quarterly Financial Data (Unaudited) March 31, 2000 Three months ended June 30, September 30, 2000 2000 December 31, 2000 (In thousands, except per share data) Revenues Net income Per Common Share (Note 2): Net income - Basic Net income - Diluted...

  • Page 33
    ... of Public Storage, Inc. as of December 31, 2000 and 1999, and the related consolidated statements of income, shareholders' equity, and cash flows for each of the three years in the period ended December 31, 2000. These financial statements are the responsibility of the Company's management. Our...

  • Page 34
    ... environment as well as national, state, and local laws and regulations including, without limitation, those governing Real Estate Investment Trusts; the acceptance by consumers of the containerized storage concept; the impact of general economic conditions upon rental rates and occupancy levels at...

  • Page 35
    ... and two commercial properties from third parties. In addition, during 2000, we acquired 4 storage properties as well as the remaining partnership interest in 13 properties that we did not already own from affiliated entities. We believe that our national telephone reservation system and marketing...

  • Page 36
    ... totaled $18,816,000, $18,825,000 and $18,730,000 for 2000, 1999 and 1998, respectively. (b) Realized annual rent per square foot is computed by annualizing rental income excluding late charges and administrative fees divided by the weighted average occupied square footage for the period. 34

  • Page 37
    ... customers. The rental rates charged to our existing customer base, is on average, less than the current scheduled rates. For 2000, the average realized rental rate per square foot was approximately $1.04 or 9.3% below current scheduled rents. Our rental agreements are generally on a month-by-month...

  • Page 38
    ... us which have both storage and commercial use combined at the same property location. CONTAINERIZED STORAGE OPERATIONS In August 1996, Public Storage Pickup & Delivery ("PSPUD"), a subsidiary of the Company, made its initial entry into the containerized storage business through its acquisition of...

  • Page 39
    ... $450,000 with respect to real estate assets. Rental and other income includes monthly rental charges to customers for storage of the containers and service fees charged for pickup and delivery of containers to customers' homes. Rental income increased to $37,914,000 in 2000 as compared to $27,028...

  • Page 40
    ... partnership units (units which are convertible into common shares on a one-for-one basis) in PSB. PSB is a publicly traded real estate investment trust organized by the Company on January 2, 1997. At December 31, 2000, PSB owned 140 properties located in 9 states. PSB also manages the commercial...

  • Page 41
    ...000 in 1998. General and administrative costs for each year principally consist of state income taxes, investor relation expenses, certain overhead associated with the acquisition and development of real estate facilities, and overhead associated with the containerized storage business. The increase...

  • Page 42
    ... summarizes our investment in real estate facilities as of December 31, 2000: Number of Facilities in which the Company has an ownership interest Storage Commercial Facilities Properties Total Net Rentable Square Footage (in thousands) Storage Commercial Facilities Properties Total Wholly-owned...

  • Page 43
    ... square foot is computed by annualizing rental income excluding late charges and administrative fees divided by weighted average occupied square footage for the year. In early 1996, we implemented a national telephone reservation system designed to provide added customer service for all the storage...

  • Page 44
    ...C . 2000 A N N UA L R E P O R T Same-Store Operating Trends by Region (Dollar amounts in thousands, except weighted average amounts) Northern California % change from prior Amount year Southern California % change from prior Amount year Texas % change from prior Amount year Florida % change from...

  • Page 45
    ...26.7 million and unsecured debt of $129.3 million. By comparison, our real estate facilities had a net book value of $3.7 billion at December 31, 2000. Accordingly, our portfolio of real estate facilities is substantially unencumbered. We have generally only increased our debt in connection with the...

  • Page 46
    ... capital base through the acquisition of real estate assets and interests in real estate assets from both unaffiliated and affiliated parties through direct purchases, mergers, tender offers or other transactions and through the development of additional storage facilities. In addition to 618 wholly...

  • Page 47
    ... the institutional investor. Our share of the cost of the real estate in the joint venture is approximately $69 million at December 31, 2000. As of December 31, 2000, the joint venture had 47 operating facilities, with 2,878,000 net rentable square feet and total development costs of approximately...

  • Page 48
    ...: (i) plus depreciation and amortization related to real estate assets (including the Company's pro-rata share of depreciation and amortization of unconsolidated equity interests and amortization of assets acquired in a merger, including property management agreements and goodwill), and (ii) less...

  • Page 49
    ...E P O R T QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK To limit our exposure to market risk, we principally finance our operations and growth with permanent equity capital consisting either of common or preferred stock. At December 31, 2000, the Company's debt as a percentage of total...

  • Page 50
    ... S TO R A G E , I N C . 2000 A N N UA L R E P O R T DISTRIBUTIONS Public Storage, Inc. has paid quarterly distributions to its shareholders since 1981, its first full year of operations. Overall distributions of Common Stock for 2000 amounted to $184.1 million, which includes a special distribution...

  • Page 51
    ... Manager General Counsel Regional Manager SVP VP Senior Vice President Vice President Professional Services Transfer Agent Fleet National Bank c/o EquiServe P .O. Box 43010 Providence, RI 02940-3010 (781) 575-3120 www.equiserve.com Independent Auditors Ernst & Young LLP Los Angeles, California...

  • Page 52
    Public Storage, Inc. 701 Western Avenue Glendale, California 91201 (818) 244-8080 Address Correction Requested www.publicstorage.com PRESORTED STANDARD U.S. POSTAGE PAID EQUISERVE 513-AR-01