Public Storage 2009 Annual Report Download - page 105

PUBLIC STORAGE
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 2009
F-18
buildings and intangibles. During 2007, we received net proceeds from partial and complete facility disposals as a result of
condemnation proceedings, totaling $8,708,000, and recorded a gain on disposition of $5,690,000, of which $4,336,000 in such
gains were included in discontinued operations.
At December 31, 2009, the adjusted basis of real estate facilities for federal tax purposes was approximately $7.3 billion
(unaudited).
5. Investments in Real Estate Entities
The following table sets forth our investments in the real estate entities at December 31, 2009 and 2008, and our equity
in earnings of real estate entities for each of the three years ended December 31, 2009 (amounts in thousands):
Investments in Real Estate Entities at
December 31,
Equity in Earnings of Real Estate Entities for the
Year Ended December 31,
2009
2008
2009
2008
2007
PSB...........................................
$ 326,145
$ 265,650
$ 35,108
$ 14,325
$ 10,502
Shurgard Europe .......................
272,345
264,145
16,269
4,134
-
Other Investments ....................
13,826
14,803
1,867
1,932
2,236
Total ...................................
$ 612,316
$ 544,598
$ 53,244
$ 20,391
$ 12,738
Included in equity in earnings of real estate entities for the year ended December 31, 2009 is $16,284,000, representing
our share of the earnings allocated from PSB’s preferred shareholders, as a result of PSB’s repurchases of preferred stock and
preferred units for amounts that were less than the related book value, during the period. During 2008, we disposed of one of the
Other Investments in exchange for another asset valued at $5,300,000, and recorded a loss of disposition of real estate
investments for a total of $9,423,000.
During the years ended December 31, 2009, 2008 and 2007, we received cash distributions from our investments in real
estate entities totaling $49,408,000, $43,455,000 and $23,606,000, respectively.
During 2009, in addition to the impact of earnings recognized and cash distributions received, our investments in real
estate entities increased by $63,882,000 due to (i) $15,764,000 in foreign currency translation adjustments, (ii) $17,825,000
representing our acquisition of an additional 383,333 shares of PSB common stock, and (iii) $30,293,000 presented in “gains on
disposition of real estate investments, net” in connection with PSB’s sale of common stock in a public offering described below in
“Investment in PSB.”
Investment in PSB
PSB is a REIT traded on the New York Stock Exchange, which controls an operating partnership (collectively, the REIT
and the operating partnership are referred to as “PSB”). We have a 41% common equity interest in PSB as of December 31, 2009
(46% as of December 31, 2008), comprised of our ownership of 5,801,606 shares of PSB’s common stock and 7,305,355 limited
partnership units in the operating partnership (5,418,273 shares of PSB’s common stock and 7,305,355 limited partnership units at
December 31, 2008). The limited partnership units are convertible at our option, subject to certain conditions, on a one-for-one
basis into PSB common stock. Based upon the closing price at December 31, 2009 ($50.05 per share of PSB common stock), the
shares and units had a market value of approximately $656.0 million as compared to a book value of $326.1 million. We account
for our investment in PSB using the equity method.
During the year ended December 31, 2009, PSB sold 3,450,000 shares of its common stock in a public offering for net
proceeds of $153.6 million. In accordance with FASB ASC Topic 323, Investments – Equity Method and Joint Ventures, we
recognized a gain totaling $30,293,000 on the share issuance by PSB, as if we had sold a proportionate share of our investment in
PSB.
Concurrent with the public offering, we purchased an additional 383,333 shares of PSB common stock from PSB at the
same price per share as the public offering for a total cost of $17,825,000.