Public Storage 2006 Annual Report Download - page 10
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c
omplement our existin
g
franchise. Since 2004, we have invested $618 million to acquire 89 facilitie
s
with approximately 6.4 million net rentable square feet. Durin
g
2006, these facilities
g
enerated
$40 million of net operating income (before depreciation) for a yield of 6.3%. As with our developmen
t
p
roperties, we expect t
h
ese returns to improve as we are a
bl
e to increase renta
l
rates
f
rom promotiona
l
lease-up rates and achieve stabilized occupancies.
Anci
ll
ary Business Operation
s
O
ur ancillary businesses – including tenant reinsurance, merchandise sales (locks and boxes), consume
r
truc
k
renta
l
(
b
ot
h
our own an
d
as an agent o
f
Pens
k
e), commercia
l
property an
d
t
h
ir
d
-party propert
y
m
ana
g
ement operations – collectively continue to contribute to our operatin
g
results.
I
n 2006, net operatin
g
income of our ancillary businesses improved by
$
7 million to
$
37 million
,
benefiting from a larger group of properties. The earnings contribution from these businesses is expected
to increase as t
h
e num
b
er o
f
se
lf
-storage
f
aci
l
ities we operate continues to grow an
d
we
h
ave a
f
u
ll
year’s
ownership of the Shur
g
ard properties.
P
ercenta
g
e
(
Dollar amounts in thousands
)
2
006 2005 Chang
e
Revenues $ 93,453 $ 75,733 23%
O
peratin
g
expenses 56,030
44
,826 25
%
N
et
$
37,423
$
30,907 21%
F
inancin
g
D
uring 2006, we raised a total of $1.4 billion in capital from four series of preferred stock and a preferred
p
artners
h
ip unit security at a
bl
en
d
e
d
annua
l
rate o
f
7.1%. T
h
e net procee
d
s
f
rom t
h
is activity a
l
on
g
wit
h
c
ash on hand were used to redeem five series of preferred stock totalin
g
$1.1 billion, with a blended annual
rate of 8%, alon
g
with fundin
g
the cash requirements of the Shur
g
ard mer
g
er. Immediately upon the
c
lose of the Shurgard merger, we repaid Shurgard’s outstanding borrowings on its bank credit facility an
d
c
ertain variable rate mortgage notes totaling $671 million. In addition, all Shurgard’s outstanding
p
re
f
erre
d
stoc
k
was re
d
eeme
d
.
O
verall, the total $3.2 billion of preferred securities outstandin
g
at year end 2006 has an avera
g
e annua
l
rate of 6.9%, 120 basis points lower than in 2003.