Public Storage 2002 Annual Report Download - page 16

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Brand name recognition: Our operations are conducted under the “Public Storage” brand name, which we
believe is the most recognized and established name in the self-storage industry. Our storage operations are
conducted in 37 states, giving us national recognition and prominence. We focus our operations within those states
in the major metropolitan markets. This concentration establishes us as one of the largest providers of storage space
in each market that we operate in and enables us to use a variety of promotional activities, such as television
advertising as well as targeted discounting and referrals which are generally not economically viable for most of our
competitors.
Growth and Investment Strategies
Our growth strategies consist of: (i) improving the operating performance of our stabilized existing
traditional self-storage properties, (ii) acquiring additional interests in entities that own properties operated by the
Company, (iii) acquiring interests in properties that are owned or operated by others, (iv) developing properties in
selected markets, (v) improving the operating performance of the containerized storage operations, and (vi)
participating in the growth of commercial facilities owned primarily by PS Business Parks, Inc. These strategies are
described as follows:
Improve the operating performance of existing properties: We seek to increase the net cash flow
generated by our existing stabilized traditional self-storage properties by a) regularly evaluating our call volume,
reservation activity, and move-in/move-out rates for each of our markets relative to our marketing activities, b)
evaluating market supply and demand factors and, based upon these analyses, adjusting our marketing activities and
rental rates, c) attempting to maximize revenues through evaluating the appropriate balance between occupancy and
rental rates, and d) controlling expense levels. We believe that our property management personnel and systems,
combined with the national telephone reservation system, will continue to enhance our ability to meet these goals.
Acquire properties operated and partially owned by the Company: In addition to our wholly owned
storage facilities, we operate storage facilities on behalf of other entities in which we have partial equity interests.
From time to time, interests in these storage facilities are available for purchase, providing us with a source of
additional acquisition opportunities. We believe these properties include some of the better-located and better-
constructed storage facilities in the industry. Because we manage these properties, we have reliable operating
information prior to acquisition, and these properties are easily integrated into our portfolio. The amount of such
potential acquisition opportunities has decreased over the last several years as we have continued to acquire such
interests. Such potential remaining acquisition opportunities include the remaining equity interests that we do not
own in the entities described as “Other Investments” in Note 6 to the Company’s financial statements, as well as the
“Other Partnership Interests” in Note 9 to the Company’s financial statements for the year ended December 31,
2002.
Acquire properties owned or operated by others: We believe our presence in and knowledge of
substantially all of the major markets in the United States enhances our ability to identify attractive acquisition
opportunities and capitalize on the overall fragmentation in the storage industry. We maintain local market
information on rates, occupancy and competition in each of the markets in which we operate.
With the exception of the March 1999 merger with Storage Trust, our investments in additional facilities
have primarily been through development, rather than acquisitions of real estate facilities. We believe the
development of real estate facilities described below is more attractive under current market conditions, which are
characterized by relatively high prices obtained in sales of existing self-storage facilities, which exceed replacement
cost.
Develop properties in selected markets: Since 1995, the Company and its joint venture partnerships
(described below in Financing) have opened a total of 119 facilities, including 19 facilities in 1998, 24 facilities in
1999, 27 facilities in 2000, 22 facilities in 2001, and 16 facilities in 2002. As of December 31, 2002, the Company
has a development “pipeline” of 38 self-storage facilities and expansions to existing storage facilities with an
aggregate estimated cost of approximately $199.8 million. Development of these facilities is subject to significant
contingencies such as obtaining appropriate governmental agency approvals. The Company continues to seek
attractive sites for development of additional storage facilities.