Public Storage 2009 Annual Report Download - page 63

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interest income to equity in earnings of Shurgard Europe. The amount of interest reclassified was approximately
$23.9 million in 2009, $17.8 million in 2008 and none in 2007.
Equity in earnings from our investment in Shurgard Europe for the year ended December 31, 2009 was
$16,269,000 compared to $4,134,000 for the same period in 2008, representing an increase of $12,135,000. This
increase includes i) a reduction in our pro-rata share of Shurgard Europe’s depreciation expense, primarily due to
declines in tenant intangible amortization, ii) our pro-rata share of a reduction in Shurgard Europe’s third party
interest expense (joint ventures in which Shurgard Europe has a 20% interest recently refinanced their outstanding
debt at substantially lower interest rates), (iii) the timing of our disposition of the 51% interest in Shurgard Europe
as equity in earnings for 2008 only includes amounts for the period of April 1, 2008 through December 31, 2008
while the 2009 includes amounts for the entire year, offset by iv) our pro-rata share of Shurgard Europe’s same-store
properties’ decline in net operating income, on a constant exchange rate basis, and (v) the effect of a change in the
average exchange rate of the Euro relative to the U.S. Dollar to 1.393 for the year ended December 31, 2009 as
compared to 1.470 for the same period in 2008.
We evaluate the performance metrics of Shurgard Europe’s Same Store Facilities in order to evaluate the
performance of our investment in Shurgard Europe, because the Shurgard Europe Same Store Facilities represent the
primary driver of our pro-rata share of earnings of Shurgard Europe.
The Shurgard Europe Same Store Facilities represent those 94 facilities that are stabilized and owned since
January 1, 2007 and therefore provide meaningful comparisons for 2007, 2008, and 2009. The following table
reflects the operating results of these 94 facilities.
Selected Operating Data for the 94 facilities operated
by Shurgard Europe on a stabilized basis since
January 1, 2007 (“Europe Same Store Facilities”):
Year Ended December 31,
Year Ended December 31,
2009
2008
Percentage
Change
2008
2007
Percentage
Change
(Dollar amounts in thousands, except weighted average data,
utilizing constant exchange rates) (a) (b)
Revenues:
Rental income ..............................................................
$ 115,785
$ 120,030
(3.5)%
$ 120,030
$ 118,578
1.2%
Late charges and administrative fees collected ............
1,892
2,018
(6.2)%
2,018
1,198
68.4%
Total revenues .................................................................
117,677
122,048
(3.6)%
122,048
119,776
1.9%
Cost of operations (excluding depreciation and
amortization expense):
Property taxes .............................................................
5,661
5,659
0.0%
5,659
5,485
3.2%
Direct property payroll ................................................
13,767
13,852
(0.6)%
13,852
14,033
(1.3)%
Advertising and promotion ..........................................
4,662
3,579
30.3%
3,579
3,772
(5.1)%
Utilities ........................................................................
2,849
2,846
0.1%
2,846
2,826
0.7%
Repairs and maintenance .............................................
3,157
3,353
(5.8)%
3,353
3,207
4.6%
Property insurance .......................................................
711
760
(6.4)%
760
1,131
(32.8)%
Other costs of management .........................................
16,902
16,490
2.5%
16,490
17,636
(6.5)%
Total cost of operations ....................................................
47,709
46,539
2.5%
46,539
48,090
(3.2)%
Net operating income (c) .................................................
$ 69,968
$ 75,509
(7.3)%
$ 75,509
$ 71,686
5.3%
Gross margin .......................................................................
59.5%
61.9%
(3.9)%
61.9%
59.9%
3.3%
Weighted average for the period:
Square foot occupancy (d) ...........................................
86.1%
86.9%
(0.9)%
86.9%
89.7%
(3.1)%
Realized annual rent per occupied square foot (e)(f) ...
$26.06
$26.77
(2.7)%
$26.77
$25.62
4.5%
REVPAF (f)(g) ............................................................
$22.44
$23.26
(3.5)%
$23.26
$22.98
1.2%
Weighted average at December 31:
Square foot occupancy .................................................
85.7%
84.7%
1.2%
84.7%
88.5%
(4.3)%
In place annual rent per occupied square foot (h) ........
$30.03
$30.32
(1.0)%
$30.32
$29.93
1.3%
Total net rentable square feet (in thousands) .......................
5,160
5,160
-
5,160
5,160
-
Average Euro to the U.S. Dollar: (a)
Constant exchange rates used herein ...........................
1.393
1.393
-
1.393
1.393
-
Actual historical exchange rates ..................................
1.393
1.470
(5.2)%
1.470
1.370
7.3%