Public Storage 2010 Annual Report Download - page 35

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Our facilities are generally operated to maximize cash flow through the regular review and adjustment of
rents charged to our tenants. For the year ended December 31, 2010, the weighted average occupancy level and the
average realized rent per occupied square foot for our self-storage facilities were approximately 89.5% and $12.65,
respectively, in the U.S. and 80% and $25.61, respectively, in Europe.
At December 31, 2010, 97 of our U.S. facilities were encumbered by an aggregate of $278 million in
secured notes payable. These facilities had a net book value of $595 million at December 31, 2010.
We have no specific policy as to the maximum size of any one particular self-storage facility. However,
none of our facilities involves, or is expected to involve, 1% or more of our total assets, gross revenues or net
income.
Description of Self-Storage Facilities: Self-storage facilities, which comprise the majority of our
investments, are designed to offer accessible storage space for personal and business use at a relatively low cost. A
user rents a fully enclosed space, securing the space with their own lock, which is for the user's exclusive use and to
which only the user has access on an unrestricted basis during business hours. On-site operation is the responsibility
of property managers who are supervised by district managers. Some self-storage facilities also include rentable
uncovered parking areas for vehicle storage. Storage facility spaces are rented on a month-to-month basis. Rental
rates vary according to the location of the property, the size of the storage space, and other characteristics that affect
the relative attractiveness of each particular space, such as whether the space has drive-up access or its proximity to
elevators. All of our self-storage facilities in the U.S. are operated under the "Public Storage" brand name, while our
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Users of space in self-storage facilities include individuals from virtually all demographic groups, as well
as businesses. Individuals usually obtain this space for storage of furniture, household appliances, personal
belongings, motor vehicles, boats, campers, motorcycles and other household goods. Businesses normally employ
this space for storage of excess inventory, business records, seasonal goods, equipment and fixtures.
Our self-storage facilities generally consist of three to seven buildings containing an aggregate of between
350 to 750 storage spaces, most of which have between 25 and 400 square feet and an interior height of
approximately eight to 12 feet.
We experience minor seasonal fluctuations in the occupancy levels of self-storage facilities with
occupancies generally higher in the summer months than in the winter months. We believe that these fluctuations
result in part from increased moving activity during the summer months.
Our self-storage facilities are geographically diversified and are located primarily in or near major
metropolitan markets in 38 states in the U.S. and seven Western European nations. Generally our self-storage
facilities are located in heavily populated areas and close to concentrations of apartment complexes, single family
residences and commercial developments. However, there may be circumstances in which it may be appropriate to
own a property in a less populated area, for example, in an area that is highly visible from a major thoroughfare and
close to, although not in, a heavily populated area. Moreover, in certain population centers, land costs and zoning
restrictions may create a demand for space in nearby, less populated, areas.
Competition from other self-storage facilities as well as other forms of storage in the market areas in which
most of our properties are located in the U.S., and certain of our properties in Western Europe, is significant and has
affected the occupancy levels, rental rates, and operating expenses of many of our properties.
Since our investments are primarily self-storage facilities, our ability to preserve our investments and
achieve our objectives is dependent in large part upon success in this field. We believe that self-storage facilities,
upon stabilization, have attractive characteristics consisting of high profit margins, a broad tenant base and low
levels of capital expenditures to maintain their condition and appearance. Historically, upon stabilization after an
initial fill-up period, the U.S. self-storage facilities we have an interest in have generally shown a high degree of
consistency in generating cash flows.