Public Storage 2002 Annual Report Download - page 8
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Please find page 8 of the 2002 Public Storage annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.The highlights of our development and acquisition activity include:
•Over the past four years we have developed and opened 49 self-storage facilities with an aggregate
cost of approximately $267.0 million (3.1 million square feet).
•In addition, over that same period of time, we developed and opened 17 combination facilities
with an aggregate cost of approximately $154.2 million (1.0 million square feet of self-storage space).
•All of these properties were in some stage of fill-up during 2002.
•The dilution to our earnings from the fill-up of these properties is estimated to be $0.15 per
common share in 2002 as compared to $0.11 per common share in 2001. The dilution is created
by the negative spread between our cost of capital and the net operating income generated by
these properties.
We believe that the per share dilution in 2002 may be the "high water" mark for two reasons: (i) our
development activity has slowed, resulting in fewer new store openings over at least the next two years, and
(ii) the newly opened projects continue to fill-up generating higher levels of net operating income.
In 2003, we are estimating that we will open 19 new self-storage facilities at an aggregate cost of
approximately $141 million (1.3 million square feet). From a capital requirement standpoint, we are
estimating that we will spend approximately $100 million on our development activities in 2003,
essentially building out our existing commitments. Going forward, we are targeting a $50 to $75 million
of annual on-going development activity in our core markets.
The acquisition environment is tough. This is due to today’s incredibly low interest rates, the tremendous
volume of private and institutional capital chasing real estate and the perceived stability of self-storage
facility cash flows. Accordingly, we anticipate selling some non-core self-storage assets.
We currently have approximately $20 million of properties up for sale with possibly another $20 million
to be sold before the end of the year. This is our first time selling properties, so there is no assurance that
we will be successful.
Tenant Insurance:
At the end of 2001, we acquired PS Insurance Company from the Hughes family. This company reinsures
policies against losses to goods stored by tenants in our self-storage facilities. After tax net income was
approximately $10.5 million for 2002.
Other Highlights:
Other transactions and events impacting us include:
•In October 2002 we redeemed our 8.0% Series J Preferred Stock ($150 million). This
redemption was financed with the proceeds from the issuance of our 7.5% Series V ($172.5
million) issued in September 2002.
•At the end of March 2003, we redeemed our 9.2% Series B Preferred Stock ($57.5 million).
•Our balance sheet remains strong and flexible.
•Our attitude towards the kind of leverage that we want on our balance sheet remains
unchanged.