Public Storage 2003 Annual Report Download - page 30

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uncovered parking areas for vehicle storage, as well as space for portable storage containers. Leases for storage
facility space may be on a long-term or short-term basis, although typically spaces are rented on a month-to-month
basis. Rental rates vary according to the location of the property, the size of the storage space and length of stay.
All of our storage facilities are operated under the "Public Storage" name.
Users of space in storage facilities include individuals and large and small businesses. Individuals usually
obtain this space for storage of furniture, household appliances, personal belongings, motor vehicles, boats, campers,
motorcycles and other household goods. Businesses normally employ this space for storage of excess inventory,
business records, seasonal goods, equipment and fixtures.
Our storage facilities generally consist of three to seven buildings containing an aggregate of between 350
to 750 storage spaces, most of which have between 25 and 400 square feet and an interior height of approximately 8
to 12 feet.
We experience minor seasonal fluctuations in the occupancy levels of storage facilities with occupancies
generally higher in the summer months than in the winter months. We believe that these fluctuations result in part
from increased moving activity during the summer.
Our storage facilities are geographically diversified and are located primarily in or near major metropolitan
markets in 37 states in the United States. Generally our storage facilities are located in heavily populated areas and
close to concentrations of apartment complexes, single family residences and commercial developments. However,
there may be circumstances in which it may be appropriate to own a property in a less populated area, for example,
in an area that is highly visible from a major thoroughfare and close to, although not in, a heavily populated area.
Moreover, in certain population centers, land costs and zoning restrictions may create a demand for space in nearby
less populated areas.
Competition from other self-storage facilities in the market areas in which many of our properties are
located is significant and has affected the occupancy levels, rental rates, and operating expenses of some of our
properties.
Since our investments are primarily storage facilities, our ability to preserve our investments and achieve
our objectives is dependent in large part upon success in this field. Historically, upon stabilization after an initial
fill-up period, our storage facility interests have generally shown a high degree of consistency in generating cash
flows, despite changing economic conditions. We believe that our storage facilities, upon stabilization, have
attractive characteristics consisting of high profit margins, a broad tenant base and low levels of capital expenditures
to maintain their condition and appearance.
Commercial Properties: In addition to our interest in 1,410 storage facilities, we have an interest in PSB,
which, as of December 31, 2003, owns and operates 18.3 million net rentable square feet in eight states. At
December 31, 2003, our investment in PS Business Parks represents less than 6% of our total assets based upon cost
of $282.4 million. The market value of our investment in PSB at December 31, 2003 of $525.0 million represents
10.5% of the book value of our total assets at December 31, 2003 of approximately $5.0 billion. We also directly
own three commercial properties with 204,000 net rentable square feet, have 1,187,000 net rentable square feet of
commercial space that is located at certain of the self-storage facilities, and own five industrial facilities with an
aggregate of 404,000 net rentable square feet that are being used by the continuing containerized storage operations.
The commercial properties owned by PSB consist of flex space, office space and industrial space. Flex
space is defined as buildings that are configured with a combination of part warehouse space and part office space
and can be designed to fit a wide variety of uses. The warehouse component of the flex space has a variety of uses
including light manufacturing and assembly, storage and warehousing, showroom, laboratory, distribution and
research and development activities. The office component of flex space is complementary to the warehouse
component by enabling businesses to accommodate management and production staff in the same facility. PSB also
owns low-rise suburban office space, generally either in business parks that combine office and flex space or in
desirable submarkets where the economics of the market demand an office build-out. PSB also owns industrial
space that has characteristics similar to the warehouse component of the flex space.