Public Storage 2000 Annual Report Download - page 40

P UBLIC S TORAGE , I NC . 2000 A NNUAL R EPORT
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Equity in earnings of real estate entities for the year ended December 31, 2000 consists of our pro rata share of the Unconsolidated
Entities based upon our ownership interest for the period. Similar to the Company, the Unconsolidated Entities (other than PSB)
generate substantially all of their income from their ownership of storage facilities, which we manage. In the aggregate, the
Unconsolidated Entities (including PSB) own a total of 254 real estate facilities, 114 of which are storage facilities. The following table
sets forth the significant components of equity in earnings of real estate entities:
Historical summary: Year Ended December 31, Dollar Year Ended December 31, Dollar
(Amounts in thousands) 2000 1999 Change 1999 1998 Change
Property operations:
PSB $ 42,562 $ 35,623 $ 6,939 $ 35,623 $ 23,301 $12,322
Development Joint Venture 4,541 2,346 2,195 2,346 729 1,617
Other investments – primarily storage 16,724 18,036 (1,312) 18,036 20,329 (2,293)
63,827 56,005 7,822 56,005 44,359 11,646
Depreciation:
PSB (14,672) (12,130) (2,542) (12,130) (7,303) (4,827)
Development Joint Venture (1,887) (1,320) (567) (1,320) (564) (756)
Other investments – primarily storage (5,266) (6,271) 1,005 (6,271) (6,017) (254)
(21,825) (19,721) (2,104) (19,721) (13,884) (5,837)
Other:
(1)
PSB
(2)
(7,150) (4,505) (2,645) (4,505) (1,220) (3,285)
Development Joint Venture 40 153 (113) 153 97 56
Other investments – primarily storage 1,217 251 966 251 (2,750) 3,001
(5,893) (4,101) (1,792) (4,101) (3,873) (228)
Total equity in earnings of
real estate entities $ 36,109 $ 32,183 $ 3,926 $ 32,183 $ 26,602 $ 5,581
(1) “Other” reflects the Company’s share of general and administrative expense, interest expense, interest income, and other
non-property, non-depreciation related operating results of these entities.
(2) During 2000, the company also recorded its pro-rata share of gain on disposition of real estate investments totaling $3,210,000.
This gain is included in the line item “Gain on disposition of real estate and real estate investments” on our consolidated statements of
income.
The increase in 2000 equity in earnings as compared to 1999 is principally the result of improved operations of PSB, offset partially
by the impact of certain business combinations occurring in 2000 and 1999 whereby we obtained a controlling interest in certain
entities and began to include the accounts of such entities in the consolidated financial statements. Prior to the inclusion of these
entities in the consolidated financial statements, we used the equity method to report our share of the entities’ earnings. Equity in
earnings of real estate entities includes income of $866,000, $3,539,000, and $1,034,000 for 2000, 1999 and 1998, respectively,
with respect to investments which no longer existed at December 31, 2000.
The increase in 1999 equity in earnings of real estate entities compared to 1998 is principally the result of improved operations of
PSB, as well as the impact of the deconsolidation of PSB effective April 1, 1998 whereby 1999’s equity in earnings includes a full year
with respect to our interest in the operations of PSB, and 1998 includes nine months of such interest. The increase is partially offset by
the impact of certain business combinations occurring in 1998 and 1999 whereby we acquired a controlling interest in certain entities
and began to include the accounts of such entities in the consolidated financial statements. Prior to the inclusion of these entities in the
consolidated financial statements, we used the equity method to report our share of the entities’ earnings.
Equity in earnings of PSB represents our pro rata share (approximately 42%) of earnings of PS Business Parks, Inc., a publicly traded
real estate investment trust. As of December 31, 2000, we owned 5,418,273 common shares and 7,305,352 operating 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 properties owned by the Company and affiliated entities