Public Storage 2011 Annual Report Download - page 55

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In 2011, we acquired 11 facilities for an aggregate cost of $80.4 million. The weighted average aggregate
capitalization rates for these acquisitions, based upon annualizing the net operating income of these facilities for the
period we owned them during the year ended December 31, 2011, was approximately 7.0% and the average
occupancy was 76.9%.
In addition, during 2011, we obtained control of two entities we had a partial interest in, and began
consolidating the two stabilized self-storage facilities (143,000 net rentable square feet) owned by these entities. We
recorded approximately $1.1 million in revenues and $0.2 million in operating expenses with respect to these
facilities during the year ended December 31, 2011.
During 2011, we completed the expansion of four facilities, and converted a commercial facility into a self-
storage facility, for an aggregate of $21.8 million (325,000 net rentable square feet).
In 2010, we acquired 42 facilities for an aggregate acquisition cost of $239.6 million. Thirty-two of the
facilities are located in California (primarily in Los Angeles and San Francisco), three facilities are located in
Chicago, IL., two facilities are located in West Palm Beach, FL., and one facility each is located in Atlanta, GA.,
Honolulu, HI., New Orleans, LA., Newark, NJ., and Columbus, OH. The weighted average capitalization rate for
these acquisitions for the year ended December 31, 2011 was approximately 8.4%.
We believe that our management, promotion, and operating infrastructure will result in newly acquired
facilities stabilizing at a higher level of net operating income than was achieved by the previous owners, who are
typically smaller operators. However, it can take 24 or more months for these newly acquired facilities to reach
stabilization, and the ultimate levels of rent to be achieved can be affected by changes in general economic
conditions. As a result, there can be no assurance that our expectations with respect to these facilities will be
achieved. However, we expect the Other Facilities will continue to provide earnings growth during 2012 as these
facilities approach stabilized occupancy levels, and the earnings of 2011 acquisitions are reflected in our operations
for a full year.
Equity in earnings of unconsolidated real estate entities
At December 31, 2011, we have equity investments in PSB, Shurgard Europe and various limited
partnerships that own an aggregate of 17 self-storage facilities with approximately one million net rentable square
feet of storage space. Due to our limited ownership interest and lack control of these entities, we do not consolidate
the accounts of these entities for financial reporting purposes, and account for such investments using the equity
method.
Equity in earnings of unconsolidated real estate entities for the years ended December 31, 2011, 2010 and
2009, consists of our pro-rata share of the net income of these unconsolidated real estate entities based upon our
ownership interest for the period. The following table sets forth the significant components of equity in earnings of
unconsolidated real estate entities. Amounts with respect to PSB, Shurgard Europe, and Other Investments,
respectively, are included in our Commercial, European Self-Storage, and Domestic Self-Storage segments,
respectively, as described in Note 11 to our December 31, 2011 financial statements.
Historical summary:
Year Ended December 31,
Year Ended December 31,
2011
2010
Change
2010
2009
Change
(Amounts in thousands)
Equity in earnings of unconsolidated real estate
entities:
PSB ...............................................................
$ 27,781
$ 20,719
$ 7,062
$ 20,719
$ 35,108
$ (14,389)
Shurgard Europe ...........................................
29,152
15,872
13,280
15,872
16,269
(397)
Other Investments ........................................
1,771
1,761
10
1,761
1,867
(106)
Total equity in earnings of unconsolidated real
estate entities
$ 58,704
$ 38,352
$ 20,352
$ 38,352
$ 53,244
$ (14,892)