Public Storage 2005 Annual Report Download - page 12
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•Low capital expenditures and no tenant improvement costs. A self-storage building is a
relatively simple design, requires a low amount of maintenance and has a very low
obsolescence factor. Since rental units are not finished with carpeting or interior paint,
no tenant improvements are required for new customers.
• Profits in cash. This is primarily a cash business, and our customers generally pay rent
a month in advance of their stay.
• Pricing power above inflation. Over the past five years, our Same Store rental rate has
grown 17.0%, compared with a 13.5% increase in the Consumer Price Index (“CPI”).
Five-Year
2001 20022003 2004 2005 Growth
Rental rate change 10.4% 1.2%(2.8%) 2.9% 4.7%17.0%
CPI change 2.8% 1.6% 2.3% 2.7% 3.4% 13.5%
In addition, certain competitive advantages within our industry differentiate us from the
competition.
• Brand name. We believe our name is the most recognized and established name in the
self-storage industry. We have national recognition since our storage operations are
conducted in 37 states and are located in major metropolitan markets.
• Scale of operations. We are the largest provider of storage space in the industry. By
managing over 1,500 facilities, our size and scope enable us to achieve higher profit margins
and a lower level of administrative costs relative to revenues.
•Media. We are the only self-storage company to use television to advertise and have been
doing so since the mid-1980s. We believe the high cost of television makes it impractical
for our competitors to use this form of advertising. Our scale of operations enables us to
do so cost effectively and to help us generate “above industry average” occupancy levels.
•Financial flexibility. With a conservative capital structure that utilizes a significant
amount of preferred stock, we are not subject to the volatility of the capital markets.
With our solid financial profile and credit rating, we are able to raise capital when
prudent versus when we “have to have it.”
Our actions and operating results demonstrate we are the leader of the self-storage industry.
Our operating model and our focus on the three P’s – People, Product and Pricing – set us