Public Storage 2007 Annual Report Download - page 12

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As a result, our earnings have been able to grow substantially without the need to increase
our common share dividend (REITs must distribute their taxable income to avoid paying
a corporate or entity level tax). In 2008, we expect to retain over $400 million of net
operating cash flow in the Company (after required maintenance capital expenditures and
our required distribution requirements) which can be “leveraged” with preferred stock to
provide “growth” capital.
Over the last ten years, we have generally issued common equity only in connection with
acquisitions and have aggressively repurchased shares when we believed it was more value
enhancing to our shareholders than acquiring additional properties. In 2008, we have
already used over $100 million of retained cash to repurchase common shares.
Conclusion
We are in a great business. Demand for our product is not directly dictated by the general
economy but by recurring lifestyle changes–marriages, divorces, births, deaths and
business expansions and contractions. We are geographically diversified with over 2,000
U.S. facilities across 38 states and nearly 200 facilities in Western Europe, with over one
million customers. The stability and predictability of our business is reflected in our 15-
year history of consistent Same Store growth. Over this period, Same Store NOI has
increased an average of 5.3% per year.
In summary, we have successfully integrated the Shurgard operations we acquired in 2006,
achieved stabilized occupancies across all portfolios and realized many of the anticipated
cost reductions from the acquisition. Going into 2008, we are in a solid financial position
and poised for opportunities.
Ronald L. Havner, Jr.
President and Chief Executive Officer
February 29, 2008